Sabana Shari'ah REIT

[brattzz]

Just think of how Aljunied GRC was handed over from PAP to Workers Party, it is just like that. No chaos. A bit buay song but orderly handover. Before Workers party's FMSS took over, it was still managed by PAP's agent. Now we want to internalize like Bishan-Toa Payoh GRC.  

Do not succumb to the scare tactics used by Sabana Manager.  There will not be chaos. The structure of the REIT is codified.  The existence of the manager and trustees are codified.  MAS overlooks the entire transition process.  Have faith in the process.  Have faith in the system, the same system that allows 50 unitholders to convene a meeting to remove the manager if they are not performing to our liking.

lolz!

very good example!! hahaha! yeah! BUAY SONG!!

think MAS at 1 point or another, will have to come out and say something...

[specuvestor]

Maybe Activists should ask Trustee for an opinion for the transactions. I think the trustee fee too good $. They should be acting like an ID rather than merely an administrator. IMHO MAS should tighten up this fiduciary duty of the trustee. They should act on behalf of the interest of the beneficiaries and accountable to the beneficiaries not the manager.

This is canadian law but looks very similar to what I understand our Trust law is, which are both Anglo based. But the ruling is that the trustee's duty is on the trust not the beneficiary:
http://www.lexology.com/library/detail.a...4f75844b83

So another way to phrase it is to ask HSBC their opinion on the transactions to safeguard the interest of the trust.
http://www.sabana-reit.com/the-trustee.html

Firstly before we debate further we have to understand that the trust is not a legal entity. The trustee is the legal entity to discharge the obligations of the trust. If I am not wrong, the Investment Management Agreement (IMA) is signed between the trustee and the investment manager
https://singaporelegaladvice.com/law-art...singapore/

The trustee takes instruction from the beneficiary who also appoints the trustee. The beneficiary also appointed the Manager and the IMA was signed on inception as per the beneficiaries' instruction. There lies the problem as I stated above. They are deemed to be an administrator doing the execution on behalf of the beneficiary rather than a fiduciary duty. They will execute what the beneficiaries decide ie remove the manager but it is grey if it is their duty to recommend an alternative. That is why if an alternative manager is proposed, it will make the process much easier and proposal to be adopted.

Without that the trustee will just wait for instruction from heaven.

[weijian]

http://infopub.sgx.com/FileOpen/20170207...eID=438262

A) Reply by Manager of SABANA is self explanatory !

hi tonylim,
Appreciate the update. It seems like your references are solely taken from the reply of 1 party, when making the comparison between 2 parties and leave none the wiser. I will leave it to the wisdom of VB crowd to judge on this. Let's focus the discussion in this thread on the issue, and not the person/s behind the issue, as have others have done.

I have also noted that a similar occurrence in the Far East Orchard thread. After discussion between moderators, a warning has been issued and all unrelated posts focusing on personal attacks and opinions have been removed, inclusive of the replies to the original unrelated post/s.

Moderator *updated on 9th Feb 9pm*

[ACTIVIST SPEAKS]

Specuvestor, Getting a standby licensed REIT Manager (employing over 100 personnel) to take over just in case we manage to overcome all odds and successfully remove the Manager, is way way beyond us. We are still the same people who came here to beg for signatures to call for a meeting to remove the manager. Let's just work with what we have. Cheers.

[specuvestor]

Don't get me wrong. Again I'm saying to call those licensed REIT managers that are into industrial properties to see if they are interested. Not asking you to assemble a team. Just like checking out brokers... not ownself getting an SGX terminal

If you die die only want to internalise the manager then of course that's not an option. Which will you choose? A cheap broker or a capable one?

Just my 2cts to help your thought process and hope you succeed.

NB I don't follow CRT but I'm wondering why would the beneficiaries pay for the Manager? What is the value of CRT or Sabana manager without the Trust? Would unit holders of a unit trust pay to change fund manager? Internalisation save on management fee? It's more like savings on the profit margin of the manager... It's unlikely the individuals will take a pay cut for the internalisation.

[newyorkcityboy]

Again, am proffering some quick thoughts:

1) Experience criteria: As was pointed out, the S-REIT industry here is nascent so how did individuals end up helming newly formed REITs if the relevant experience to fulfill the criteria was that narrowly defined? Hence, my view is that the regulator will not require the decade of experience to strictly be from managing another Singapore REIT. A read of the CVs of CEOs of previous REIT managers available on websites and annual reports will confirm this. So the candidate could just be a well qualified investment professional with ten years experience in real estate investment management and asset management. And you are also not constrained to these shores... she or he may have picked up the skills overseas too.

2) Staff count: A REIT manager will not come close to having 100 staff. It is an asset light business model and a small team will do. Duties such as property and facilities management are carried by the property manager. Property management services are also provided by JLL, Colliers etc.

3) Margins of REIT management: The manager of fellow S-REITs such as Suntec, Cache happens to be a listed entity (currently subject to a take private deal though). Though the publicly available accounts of ARA Asset Management, the disclosed net profit margin for ARA was 60% in FY2015. Note that ARA manages a plethora of property funds (including private funds).

4) Reaching out to another local industrial REIT manager: There may be conflict of interest issues for a current industrial REIT manager to manage a second REIT with an overlapping mandate. Would "chinese walls" be accepted to the regulator?

5) Liquidation by bank : At 40% gearing, is it in the interests of banks to trigger a fire sale? If the keys (of the properties) are handled back to the bank, can the bank manage the properties? Given how properties are valued (say using comparables), wouldn't a fire sale of assets lead to further marking down of asset value for other loans on the bank's portfolio?

6) Threshold for removal of REIT manager: The key clauses are in the REIT's trust deed which any unitholder should be able to obtain. Worthwhile to check whether the voting threshold for appointment and removal of REIT manager is 75% or 50%, and how the threshold is met (whether by unitholder present at EGM or total unit pool). Depending on the foregoing, a REIT manager which is not owned by an entity that has more than 25% or 50% stake in the REIT (and correspondingly have blocking rights) could risk losing management rights.

[momoeagle]

Hi all,

6 years ago, I didn't invest into this but into AIMS, in the same industrial REIT arena.
One of main reasons was: I felt that Shar'iah Compliant is not an asset, but a liability. It is a form of restriction, and restrictions like this doesn't really help any business.
However, Sabana repackaged it as an asset, and something to brag about.

6 years later, my viewpoint remains the same. Of course, I didn't follow it further, I am not sure what happened to it.

It is really interesting to note that.. when investing in a REIT, or even a business in general, some investors consider restrictions to be an asset and not a liability. It's like purposely reducing your market reach in this scenario... something that isn't ideal for a business.

One question I have is... how far were the expiry of master leases actually affected by the Shar'iah Compliant requirement? Just my thoughts...

*Not vested since IPO.

[ACTIVIST SPEAKS]

SPECUVESTOR You are right about the savings. It is all about saving on the profit margin of the Manager. The Sabana Manager takes "20% cash/80% share" management fee right from the first day. This "20% cash" has been enough to support the entire operation all these years.... this begs the question how much their profit margin is. This savings can be really really big.

Imagine me walking into a listed REIT and ask to see the CEO. "Hi, I am Jerry Low. I need to know whether you are interested to take over Sabana REIT because we want to remove your friend, Kevin X and his team. The 66 of us have a total of 0.6% stake in the REIT." You get the picture?

We are right all along and they were wrong from the start. The Trustee has both the right to fire and the right to hire. In the event the unitholders remove the manager, the Trustee may appoint a new Manager. It has always been my contention that after the Manager is removed, we can direct the trustee to look/set up a new internalized manager. I see no merit in replacing an external manager with another external manager. And we are definitely not paying to internalize the present team.

NEWYORKCITY BOY MAS did not approve Cambridge's application to manage two similar industry REITs although they did indicate they will consider future application. Again, because we want to internalize, this is not the issue.

I believe from day one that we, a 66 member motley crew, do not have the mandate, the experience nor the ability to look tor the replacement manager (see, I do not even know how many people a Manager employs). This is the duty of the Trustee and MAS will assess their fit and proper criteria. Some disagree. They said it is not the duty nor the right of the Trustee to look for a replacement. And that was the main reason why one of the participants went on to start another group to remove the manager. He told everyone not to sign our letter and by doing so, there will be chaos, raping of assets and end of world scenario. I refuse to talk to any "Johnny comes lately" team hoping to take over Kevin X's place (and there were many) simply I do not know how to assess them. In addition, I want to internalize and not replacing Kevin X with another external Manager. We have confirmation now that we are right all along. The trustee does have a duty to appoint the next Manager, with the approval of the unitholders.

I already explained to Specuvestor why it is a bit silly for me to approach another local industrial REIT Manager (which the other group tried.... I am not sure whether they got past the receptionist). It is after the media publicity that we are being taken a little bit more seriously. Prior to this, our email queries to Bobby Tay, IR Sabana Manager was ignored and our re-sent email was answered with a "we will have a internal discussion on this subject". In any way, we are looking to internalize.

I think the scare tactics employed by the Manager works on many people. Yes, there is a default on the loan convenants if the manager is removed and the bank MAY call the loans. The manager does not own the property and these properties are less than 45% pledged. These are just strategies to deeply entrench them in their position. You got to ask yourself...who is the client here? Do you really think the banks will force sell a 42% pledged loan property portfolio of a listed REIT owned by more than 30,000 unitholders just because the incompetent Manager is replaced?

Removing Manager - It is simple majority of those present and voting. It is in the code and Sabana Manager has acknowledged receipt of our requisition letter. The date of the meeting has to be announced as soon as practicable or in any case less the 2 months from the receipt of the letter. The Meeting is on. The odds are against us. At least 3000 people must turn up to vote before we have a chance to remove the manager. Wish us luck.

[TTTI]

"It is simple majority of those present and voting. It is in the code and Sabana Manager has acknowledged receipt of our requisition letter. The date of the meeting has to be announced as soon as practicable or in any case less the 2 months from the receipt of the letter. The Meeting is on. The odds are against us. At least 3000 people must turn up to vote before we have a chance to remove the manager. Wish us luck."

Just wanna understand this a bit better,
how'd you work out that you need at least 3000 people turning up to vote?
Since you said you just need "a simple majority of those present and voting"

[ACTIVIST SPEAKS]

The sponsor and the manager has around 12%. I am just grabbing a figure from the sky based on the fact if minority shareholder has an average of 50,000 share each. 3000 people will give us around 15%. (The 66 guys who came down to sign the letter has an average of 100,000 share each). The number of direct CDP unitholders is 12,600. I estimate there are another 18,000 in CPF,SRS and Nominees. I understand the average attendance of their AGM is less than 100.... very very very tall order ahead.